Browsing by Author "Bonin, John"

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  • Bonin, John; Hasan, Iftekhar; Wachtel, Paul (2014)
    BOFIT Discussion Papers 8/2014
    Modern banking institutions were virtually non-existent in the planned economies of cen-tral Europe and the former Soviet Union. In the early transition period, banking sectors be-gan to develop during several years of macroeconomic decline and turbulence accompa-nied by repeated bank crises. However, governments in many transition countries learned from these tumultuous experiences and eventually dealt successfully with the accumulated bad loans and lack of strong bank regulation. In addition, rapid progress in bank privatiza-tion and consolidation took place in the late 1990s and early 2000s, usually with the par-ticipation of foreign banks. By the mid 2000s the banking sectors in many transition coun-tries were dominated by foreign owners and were able to provide a wide range of services. Credit growth resumed, sometimes too rapidly, particularly in the form of lending to households. The global financial crisis put transition banking to test. Countries that had expanded credit rapidly were vulnerable to the macroeconomic shock and there was con-siderable concern that foreign owners would reduce their funding to transition country sub-sidiaries. However, the banking sectors turned out to be resilient, a strong indication of the rapid progress in institutional development and regulatory capabilities in the transition countries. Keywords: transition banking, bank privatization, foreign banks, bank regulation, credit growth JEL codes: G21, P27, O57
  • Bonin, John; Hasan, Iftekhar; Wachtel, Paul (2008)
    BOFIT Discussion Papers 12/2008
    Modern banking institutions were virtually non-existent in the planned economies of cen-tral Europe and the former Soviet Union. In the early transition period, banking sectors began to develop during several years of macroeconomic decline and turbulence accompa-nied by repeated bank crises. However, governments in many transition countries learned from these tumultuous experiences and eventually dealt successfully with the accumulated bad loans and lack of strong bank regulation. In addition, rapid progress in bank privatiza-tion and consolidation took place in the late 1990s and early 2000s, usually with the partic-ipation of foreign banks. By 2005, the banking sectors in many transition countries had developed sufficiently to provide a wide range of services with solid bank performance. Recently, banks have switched their focus from lending to enterprises in a somewhat un-derdeveloped institutional environment to new collateralized lending to households, which accounts for much of the recent growth of credit in many transition countries. Keywords: transition banking, bank privatization, foreign banks, bank regulation, credit growth. JEL codes: G21, P30, P34, P52
  • Bonin, John; Wachtel, Paul (2004)
    BOFIT Discussion Papers 22/2004
    Published in Systemic Financial Crises: Resolving Large Bank Insolvencies, D. Evanoff, G. Kaufman, eds., World Publishing, 2005
    We examine the efforts of transition economies to deal with financial fragility and resolve banking cries We characterize the birthing process of banking in transition and the three essential features of banking crises in transition economies: (i) bad loans and the relationship to state owned industries, (ii) development of institutional infrastructure and (iii) credible commitments to resolution and privatization.We then discuss the experiences of seven important transition countries in order to identify the salient features of their efforts to resolve banking crises.
  • Bonin, John; Wachtel, Paul (2002)
    BOFIT Discussion Papers 9/2002
    Published in Financial Markets, Institutions and Instruments vol 12, no 1 (2003), pp. 1-66
    The first decade of transition witnessed rapid and tumultuous financial sector development.Although, few transition economies have reached the point where institutions and markets fulfill all the functions of market based financial intermediation, progress has been much more rapid than had been anticipated.In many countries, active market-oriented financial institutions function where there was only a state planning mechanism a decade ago. Initial experiences showed that bank privatization programs often failed to achieve independence from government control and from undesirable weak clients.It is now widely accepted that the participation of foreign strategic investors in banking is an effective way of meeting these goals Capital market development is complicated by the need to support the development of institutional infrastructure and regulatory mechanisms while at the same time avoid interfering in the markets.In many instances policy makers expected immature markets and institutions to accomplish unattainable goals.Equity markets cannot be effectively support mass privatization programs.There are still many missing pieces in virtually all of the transition country capital markets. Key words: capital markets, financial sector, privatization, transition economies